Posted on 08/31/2007 8:53:20 AM PDT by Ernest_at_the_Beach
In lawsuits, as in baseball, there is no mercy rule. One side can be down by a dozen runs, but the game continues until the bitter end. So it is that SCO filed on Aug. 29 an appeal to the U.S. District Court decision that declared that Novell had never sold Unix's intellectual property to SCO.
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(Excerpt) Read more at linux-watch.com ...
Pity. $100M doesn’t buy you much these days...
Statement from SCO Regarding Recent Court Ruling
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The company is obviously disappointed with the ruling issued last Friday. However, the court clearly determined that SCO owns the copyrights to the technology developed or derived by SCO after Novell transferred the assets to SCO in 1995. This includes the new development in all subsequent versions of UnixWare up through the most current release of UnixWare and substantial portions of SCO UnixWare Gemini 64. Also, SCO owns the exclusive, worldwide license to use the UnixWare trademark, now owned by The Open Group. SCO's ownership of OpenServer and its Mobile Server platforms were not challenged and remain intact. These SCO platforms continue to drive enterprises large and small and our rapidly developing mobile business is being well received in the marketplace.
What's more, the court did not dismiss our claims against Novell regarding the non compete provisions of the 1995 Technology License Agreement relating to Novell's distribution of Linux to the extent implicated by the technology developed by SCO after 1995. Those issues remain to be litigated.
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Although the district judge ruled in Novell's favor on important issues, the case has not yet been fully vetted by the legal system and we will continue to explore our options with respect to how we move forward from here.
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Forward-Looking Statements: The statements contained in this press release, including but not limited to statements regarding the Company’s pending litigation and expectations concerning the Company’s developing mobile business OpenServer and Mobile Server platforms and other statements that are not historical facts, are forward-looking statements and are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks and uncertainties. We wish to advise readers that a number of important factors could cause actual results to differ materially from historical results or those anticipated in such forward-looking statements. These factors include, but are not limited to, developments in the Company’s litigation with Novell and IBM, continued competitive pressure on the Company's operating system products, which could impact the Company's results of operations, adverse developments in and increased or unforeseen legal costs related to the Company's litigation, the inability to devote sufficient resources to the development and marketing of the Company's products, including the Me Inc. mobile services and development platform, and the possibility that companies with whom the Company has formed partnerships will decide to terminate, or reduce the resources devoted to, their partnership with the Company. These and other factors that could cause actual results to differ materially from those anticipated are discussed in more detail in the Company's periodic and current filings with the Securities and Exchange Commission, including the Company's Form 10-K for the fiscal year ended October 31, 2006 and Form 10-Q for the fiscal quarter ended April 30, 2007. These forward-looking statements speak only as of the date on which such statements are made, and the Company undertakes no obligation to update such statements to reflect events or circumstances arising after such date.
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SCO Goes Down in Flames: Novell owns Unix
Aug. 10, 2007
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The day Linux fans have been waiting for since SCO attacked Linux on May 12, 2003 has finally arrived. U.S. District Court Judge Dale Kimball has ruled that Novell, not SCO, owns Unix's IP (intellectual property) rights. This, in turn, means the end of SCO's cases against IBM.
In his 102-page decision, Kimball went on to rule that "SCO is obligated to recognize Novell's waiver of SCO's claims against IBM and Sequent" [story], Thus, not only does Novell own Unix, SCO's cases against IBM have essentially been destroyed.
Putting salt into SCO's wounds, Kimball also ruled that while "The court ... is precluded from granting a constructive trust with respect to the payments SCO received under the 2003 Sun and Microsoft Agreements [story] because there is a question of fact as to the appropriate amount of SVRX Royalties SCO owes to Novell based on the portion of SVRX products contained in each agreement." In short, SCO owes Novell at least some of the funds it received from its Microsoft and Sun Unix licensing deals, which it used to fuel its anti-Linux lawsuits.
In the end, what did SCO in was not its ever more shaky IP claims against Linux, but the contract that gave SCO the right to sell and market Unix, but not its IP rights. Since February of 2004, Novell had been insisting that in the original APA (Asset Purchase Agreement) and Amendment No.2 to the APA, it never sold Unix's IP to SCO.
Why did Microsoft and Sun support SCO?
Jun. 05, 2007
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Back in the beginning of SCO's all-out assault on Linux and IBM, the Unix company received a much needed financial boost to its lawsuit plans with two major contracts. These deals with Microsoft and Sun brought SCO $26.5 million. This money, in turn, fueled SCO's lawsuits.
At the time, many critics of SCO wondered what in the world Sun and Microsoft could have been buying from SCO. Most people thought the answer was that they were buying an attack on a rival company, IBM, and a rival operating system, Linux.
Now, as a byproduct of SCO v. Novell -- the case over who really owns Unix's IP (intellectual property) -- and thanks to Groklaw, we now know what Sun was buying from SCO (PDF download). In part, it does seem to be an attack on Linux; but that wasn't all.
According to the court exhibit, Sun bought a "right to use license" (RTU license) for its commercial Linux end-users. In addition, Sun was buying "a UnixWare source code license to developers," and both licenses "contained a covenant not to sue, which provided that the licensee would not be exposed to liability for the use of SCO's intellectual property in Linux."
Nowhere does the exhibit explain in any detail exactly what SCO IP was hidden within Linux. Does that sound to you like the sort of vague patent claims made by Microsoft in regards to its recent patent deals with Novell and with Xandros? It does to me.
What makes this even odder is that, according to the exhibit, Microsoft and Sun also paid for UnixWare rights, and incidental rights to the older UNIX System V source code. Since they had paid for the rights to use Unix, why should they also be paying SCO not to sue them for the use of Linux?
My conclusion, then, as now, is that both companies were paying for SCO to attack IBM and Linux. It's difficult for me to see it in any other light. Both companies, after all, already had licenses to use SCO's Unix and IP.
In addition, though, this document supports the contention by Jonathan Schwartz -- then Sun VP of software and today Sun's president and CEO -- in an 2003 eWEEK interview that Sun had bought "rights equivalent to ownership" of Unix.
Another day, another knockout punch aims at SCO
Dec. 05, 2006
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Last week saw the end of most of The SCO Group's claims of IBM contributing Unix code to Linux. Now, Novell has filed a motion that undercuts all of SCO's contract claims against IBM, based on a "silver bullet" clause in the original sale of Unix to SCO.
In its latest legal move against SCO, Novell on Dec. 1 filed for partial summary judgment against SCO in its own case. In this motion, Novell is asking the U.S. District Court to rule that the Unix APA (Asset Purchase Agreement), which sold Unix from Novell to SCO, gave Novell the right to waive SCO's contract claims.
Novell had long claimed that it never sold Unix's IP (intellectual property) rights to SCO. This new motion, however, isn't connected with those claims.
In the APA, Novell has what Mark Radcliffe, co-chair of the Technology and Sourcing Practice Group at the law firm DLA Piper, called, when Novell first made these claims, a "silver bullet" provision under the APA to block SCO's actions under these licenses. "This provision permits Novell to amend, supplement, modify or waive provisions of the Unix licenses sold to SCO," Radcliffe said. "Novell also retained the unusual right to require SCO to follow its directions to amend, supplement, modify or waive these licenses and, if SCO does not comply, Novell can do so on SCO's behalf."
In the memo in support of the motion (PDF Link), Novell puts it bluntly: "Novell's motion presents a single issue: whether the express terms of a 1995 contract authorize Novell to direct SCO to waive its purported legal claims for alleged breaches of SVRX license agreements with IBM and with Sequent, and to take action on SCO's behalf when SCO refuses to so waive, where the plain language of the 1995 contract gives Novell 'at its sole discretion and direction' the right to take such action concerning 'any SVRX License.'"
While unusual, the APA appears to be quite clear on this point. According to Section 4.16 SVRX Licenses, sub-section b of the APA, SCO "shall not have the authority to, amend, modify or waive any right under or assign any SVRX License without the prior written consent of [Novell.]"
If the court agrees with Novell's logic, this would knock-out all of SCO's contract claims.
Aftershocks: SCO and Novell on the Novell/SCO court decision
Aug. 13, 2007
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Although Novell has won clear title to Unix's IP (intellectual property) rights, SCO isn't ready to throw in the towel yet.
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I gather SCO has noticed that the SCO v. IBM litigation won't be nearly so annoying to IBM unless it does something fast about Judge Dale Kimball's August 10th ruling, which pared that case, like all of SCO's cases, down to almost nothing but the counterclaims against SCO.
So it's asking the court to enter a final judgment on certain matters the ruling decided, so it can seek an immediate appeal on those issues, such as whether it owns the UNIX and Unixware copyrights after all and whether Novell has the authority to tell SCO to waive any purported breach of contract by licensees. Those are the two that shot arrows straight through SCO's heart. Well. The heart of its litigation. I believe the evidence before us demonstrates that SCO is a corporation, and hence it has no heart.
Otherwise, SCO has to wait until Novell goes through trial to a verdict and then appeal, and while it is in the appeal process, IBM would go forward in its now much smaller version, based on the August 10th ruling. SCO would rather appeal right away so it can try all its claims in IBM, should it successfully appeal the judge's order. The trial starts, though, in less than a month and it will last less than a week, so none of this makes any sense if you look at a calendar. I think, therefore, it must be about FUD, so it sounds like SCO is on the move again or something.
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Here, thanks to Steve Martin, we have SCO's Memorandum in Support of its Motion for Entry of Final Judgment Pursuant to Federal Rule of Civil Procedure 54(b) [PDF] as text. Note that this document is a request to the judge to let them appeal certain matters, but it's not an appeal and the judge is not required to say yes. It's unusual, I'm told, to be successful with a 54(b) motion. I mention it because I see a headline, "SCO appeals Unix ruling, seeks a second act" on MarketWatch, and that isn't accurate. The article mentions that the stock has risen:
On Wednesday, SCO filed an appeal challenging an Aug. 10 ruling by a federal judge in Utah that Novell Inc., McBride's former employer, owns the rights to Unix operating system software. SCO sued Novell in 2004 over Unix, which has been SCO's lifeblood.SCO's shares, now in the penny stock category, rose 44%, to 72 cents in Thursday trading.
If folks are buying based on the idea that an appeal was filed Wednesday, I hope they read the filing, so they have more accurate information. I trust SCO would have no desire to mislead the public.
The parties in SCO v. Novell have also filed their proposed jury instructions today, and Steve and I are busy transcribing them for you. You will recall that Judge Dale Kimball asked the parties in SCO v. Novell to give him a joint proposed set of jury instructions, and where they couldn't agree to provide them separately along with authority for their positions. Here it is, Joint Statement Regarding Jury Instructions [PDF] along with Exhibits 1 and 2 [PDF], the first being the instructions they were able to agree on and the latter the ones where they don't see eye-to-eye, at least not yet. They inform the judge that they continue to try to reach agreement. But they have until September 5th to tell him why they think the other side's instructions are improper. Final decision is his.
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